South Korea ‘most attractive’ drinks market in Asia

South Korea is the “most attractive” market in Asia for alcohol producers, while Cambodia has been labelled “one to watch” due to rising consumption levels, according to a study by research company Fitch Solutions.

Asia ranked second in the Alcoholic Drinks Risk/Rewards Index

Fitch Solutions published its Alcoholic Drinks Risk/Rewards Index, which ranks the associated risks and rewards for drinks producers listing their products in different countries.

South Korea came out on top in Asia after researchers found it offered high rewards and lower risks. The country is also the only Asian market to reach the top 10 in the global ranking, placing seventh.

China was placed second in Asia, after it was deemed to offer high rewards in return for an “average” level of risk.

Fitch Solutions noted that China’s position in the ranking could increase due to its “mass affluent class”. Researchers found that the number of households with a disposable income of US$10,000 or more stands at 60 out of 100 and is projected to reach 69.6% in 2023.

To work out the position of each country in its Risk/Rewards Index, Fitch Solutions rated the industry- and country-wide risks and rewards in each region. From this, the company was able to formulate a score out of 100 based on a country’s performance in each sector.

‘One to watch’
The Alcoholic Drinks Risk/Rewards Index named Cambodia as “one to watch” after the country scored the highest in the region for industry rewards. The industry rewards pillar measured the current alcohol consumption levels and growth outlook, meaning that a high score indicates an alcohol market with “growth opportunities available”.

According to Fitch Solutions, Cambodia offers a “robust growth rate”, which is expected to see alcohol consumption increase by 10.4% annually between 2020 and 2023 – rising from 90 litres per capita in 2019 to 114 litres in 2023.

Cambodia also has one of the largest shares of young adults in the region, at 36% of the total population, creating a “favourable market for first-time alcohol drinkers”.

Despite its positive outlook, the country’s current ranking is “weighed down by the risks”, with issues associated with its low urban population, and minimal food and drink formalisation affecting its prospects.

The latest Alcoholic Drinks Risk/Rewards Index has also seen Singapore improve its ranking, rising from 14th in Asia during the fourth quarter of 2019 to 10th in the first quarter of 2020. The country’s increase was due to a higher level of rewards for the industry as a result of increasing alcohol consumption per capita, projected alcohol growth and rising total alcohol consumption.

As a region, Asia maintained the same score of 55.3 out of 100, positioning it as the “second most attractive region” after North America and Western Europe, which scored 62.